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Welcome to the latest edition of Law Update titled “Rise of Generative AI.”
In this edition, we dive into the dynamic world of Technology, Media, and Telecommunications (TMT) across the Middle East and North Africa (MENA) region. TMT continues to play a vital role in positioning the region as an international business and social hub, driving significant growth and innovation.
Our focus in this Law Update is on the sector’s ongoing potential to advance and propel the region toward a more digital economy. We explore the benefits of embracing a digital transformation and how local authorities have responded by enhancing regulations to accommodate the evolving TMT landscape.
This edition covers a range of topics, including – the new Telecommunications & Information Technology Law in Saudi Arabia, the intricacies of trademarks in the Metaverse, and the legal challenges faced by the video game industry. Additionally, we take a regional perspective, discussing jurisdictions such as Kuwait, Saudi Arabia, UAE, Oman, and Bahrain to provide a comprehensive understanding of the TMT landscape.
We hope you thoroughly enjoy this packed issue of Law Update, filled with captivating articles that address key legal issues within a vital sector for the region.Read the full edition
Khaled Gamaleldeen - Senior Counsel - Litigation
Fatma Mossa - Senior Associate - Litigation
December 2015 – January 2016
This Dubai Court of Cassation applied this principle in a recent case involving the obligations of a party to a contract (the “Original Tenant”) under which it assigned its lease to another party who wished to take over the Original Tenant’s lease (the “New Tenant”).
The Original Tenant had agreed to assign its lease to the New Tenant. The Original Tenant’s obligations under the contract were limited to concluding an assignment of the lease in favor of the New Tenant. The contract did not require the Original Tenant to obtain an assignment or consent to an assignment from the landlord under the lease in favor of the New Tenant.
The New Tenant (the claimant in the court proceedings) sued the Original Tenant to terminate the contract and recover the amount of AED 220,000 that it had paid to the Original Tenant because the Original Tenant (the defendant) failed to fulfill its obligation to transfer the lease to the New Tenant.
Court of First Instance
The Court of First Instance ordered that the contract be terminated and that the Original Tenant return the amount paid by the New Tenant with interest. The Original Tenant appealed.
Court of Appeal
The primary ruling was upheld on appeal and the Original Tenant appealed again.
Court of Cassation
The Original Tenant took exception to the Court of Appeal’s ruling on the following grounds:
The Court of Cassation dismissed the appeal on the basis that the Court of Appeal’s ruling was correct since, according to Article 246 of the Civil Transactions Law (Federal Law No. 5 of 1985), a contract shall be performed in accordance with its terms and in a manner consistent with the requirements of good faith. The contract shall not be restricted to an obligation upon the contracting party to do that which is expressly contained in it, but shall also embrace that which is appurtenant to it by virtue of the law, custom and the nature of the transaction.
The Court of Cassation held that the Court of Appeal, in exercising its discretion, correctly found that there was no express consent or assignment by the landlord with respect to the Original Tenant’s assignment in favor of the New Tenant. Further, the Court of Appeal had correctly concluded that the Original Tenant was in breach of contract because it did not refrain from concluding the assignment and transferring the rent to the New Tenant in order to obtain the landlord’s prior consent, even though the contract did not state that the Original Tenant must obtain the landlord’s consent.
Significance of the Ruling
The Court of Cassation confirmed the principle that a contract should be performed in good faith and that the obligations of the contracting parties are not restricted to those expressly stated in the contract but extend to those that are appurtenant to it by virtue of the nature of the transaction.
The Court of Cassation further confirmed that a tenant shall, upon assigning its lease to another tenant, obtain the landlord’s prior consent to the assignment; otherwise the assignment contract may be terminated and the parties returned to the positions they occupied prior to entering into the contract (i.e. the original tenant/assignor shall return the amount paid and the new tenant/assignee shall surrender the leased premises if it passed into the new tenant’s possession). The Court found that this is a contractual requirement given the nature of the transaction notwithstanding any actual assignment by the original tenant or the absence of a provision in the contract requiring the original tenant to obtain the landlord’s prior consent.
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